4 Things to Look for in Sign-Up Bonus Fine Print

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Failure to read the rules could cost you big time.

Without a doubt, the key to most of those stories about paying for vacations with credit card points is sign-up bonuses. While some of the best rewards credit cards can earn up to 5x points per dollar on certain purchases, it would take significant spending to get to a free flight without the major head start offered by a good sign-up bonus.

Of course, before you start planning how to use your cache of cash back or piles of points, you have to actually earn the sign-up bonus. Unfortunately, when you have visions of vacations dancing in your head, it's all too easy to get lost in the shine of the size of your bonus -- and forget everything else.

It's important to read all of the fine print regarding your new card's sign-up bonus to ensure you don't lose out on hundreds of dollars in rewards on a technicality. Let's take a look at some of the important rules you'll need to play by to earn a sign-up bonus.

1. The spending requirement

Right off the bat, you should look for the spending requirement. You'll need to use your card in some manner to earn the bonus.

Very rarely, you'll find a card that simply requires you to make a single purchase -- of any size -- with your new card to earn the sign-up bonus. However, the vast majority of credit card sign-up bonuses require you to meet a specific spending requirement on your card.

How much you need to spend tends to vary directly with the size of the bonus. The larger the bonus, the higher the spending requirement.

For example, a cash back card with a $150 sign-up bonus may have a spending requirement of just $500. On the other hand, if you're looking to earn 60,000 points with a premium travel rewards card, you'll probably see a spending requirement in the $3,000 to $5,000 range.

2. The time limit

Every credit card sign-up bonus has three numbers of note: the size of the bonus, the amount of the spending requirement -- and the time limit. Not only will you need to spend a set amount to earn your bonus, but you'll need to hit that spending requirement within a specific amount of time to qualify.

If you don't spend the specified amount before the time limit expires, you forfeit the sign-up bonus. In general, the purchase just needs to be made (i.e., pending) before the end date; it doesn't typically need to have cleared before the time limit ends.

For the vast majority of bonuses, you'll have three months (or 90 days) from when you open the account to meet the spending requirement. However, some cards -- mostly premium cards from American Express -- may offer up to six months.

3. The qualifying charges

While you're swiping your way towards a sign-up bonus, it's good to remember that not every single card transaction will count towards your spending requirement. In fact, only your net new purchases will actually qualify as eligible spending. Other transactions that won't qualify as eligible spending include:

  • Annual fees
  • Balance transfers
  • Interest fees
  • Cash advances
  • Foreign transaction fees
  • Late fees

Additionally, any purchases that are reversed -- such as if you return an item for a refund -- won't count towards your spending requirement. And no, it's not a good idea to try to return something after you've earned the bonus. The card issuer may decide to claw back your bonus for failure to meet the qualifications.

4. The eligibility restrictions

The most obvious restriction on eligibility for earning a credit card sign-up bonus is that you have to actually be eligible for the card. No card, no bonus. But even if you can qualify for the card, you may not be eligible for the bonus.

For example, American Express has a lifetime limit on its rewards cards; you can only earn a welcome bonus for a given Amex card once per lifetime. If you've already earned a bonus for a specific card, you generally can't earn another bonus for that card ever again.

Other issuers also have limits on how often you can earn a bonus, though few are quite as severe as Amex. Chase and Citi, for instance, both have restrictions on many of their rewards cards that limit you to one sign-up bonus per card family every 24 months.

Some card issuers will warn you when you try to apply for a credit card if you're ineligible for the sign-up bonus -- but other issuers won't make a peep. It's a good idea to keep track of what bonuses you've earned and when. That way, you can prevent losing out on a bonus you were never eligible for in the first place.

Don't let fine print take away your bonus

Just like those commercials with the fast-talking voice rattling off restrictions -- do we really need to be told it's void where prohibited? -- sign-up bonuses can have a lot of "gotchas" in the fine print. Carefully reading through the rules for earning your bonus can save you a lot of hassle and possibly prevent you from missing out on hundreds of dollars in rewards.

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